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Should the city move to a two-year budget?

Thursday, November 29, 2018 by Jack Craver

Every week that City Council holds a Thursday meeting, Council members meet Tuesday for a “work session” to discuss items that they plan to vote on at the meeting. In recent months, however, Council has also begun setting aside an hour during some work sessions for a broad conversation about how to make city government more efficient and effective.

The exercise is part of an ongoing effort to orient every city program and process toward one of six “strategic outcomes.” The relevant outcome in this case is somewhat of a catchall: “Government that works.”

The most recent hourlong discussion focused on two ideas that Council members have floated in recent years: Switching from a one-year budget cycle to a two-year budget cycle, and developing a process to regularly review programs and consider whether they should continue.

Council Member Jimmy Flannigan has been talking about biennial budgets ever since his election two years ago. Flannigan contends that Council and city staff would make better use of their time if a large chunk of each year weren’t devoted to crafting a budget.

“Is it necessary to do communitywide budget conversations with the same information every year?” he asked at the work session.

Most states, including Texas, set biennial budgets, but it remains exceedingly rare for cities to do so. There are some notable exceptions, including San Francisco; Oakland; Portland, Oregon; and Dallas.

One way to do it, explained Deputy Chief Financial Officer Ed Van Eenoo, would be for Council to adopt the general fund budget in odd-numbered years and the budgets for enterprise departments, such as Austin Energy, Austin Water and the airport, in even years.

Van Eenoo noted that while the enterprise departments account for roughly three-quarters of the city’s $4 billion budget, they tend to get far less attention during the budget process than the general fund. That is largely because the enterprise departments are funded by user fees and Council has far less discretion over how they spend their money. Nevertheless, a separate process might provide them more attention, Van Eenoo suggested.

Another option would be for Council to deal with the comprehensive budgeting for departments every two years and go through a shorter appropriating process in the years between. That’s in part because state law requires cities to determine department appropriations annually, but also because Council might want to shift funding in response to any number of changes that could take place over a two-year period.

Mayor Steve Adler expressed skepticism that Council would be able to stick to such a plan, rather than trying to make big budgetary changes every year.

Mayor Pro Tem Kathie Tovo argued that the city already engages in long-range financial planning, with departments presenting multi-year goals and funding forecasts to justify program spending. She didn’t view the description of the two-year budgeting process in Dallas as “wildly different from what we do.”

Council Member Greg Casar noted that a number of states have recently switched from biennial to annual budgets. He also said he was wary of modeling Austin’s budget process after those of other cities, given that “Austin’s political culture is so unique.”

“I think it can be challenging, but I think it’s a blessing in many ways that the community pays as much attention to the budget every year as it does,” said Casar.

Before taking any steps, Adler said that he would like to get more feedback about the experience other cities have had with two-year budgets.

On the issue of program review, Council Member Alison Alter said that the city should have a regular process by which city staff assess the impact and cost of each program, similar to the way Council regularly adjusts utility fee schedules.

Earlier this month, voters defeated a ballot proposition that would have required the city to hire an outside auditor to conduct an “efficiency study” of all of the city’s services. Although Alter was originally a sponsor of a resolution to approve the measure, the process she described at work session was fundamentally different, since it focused on putting in place regular, systemic program review, rather than one large comprehensive study.

One problem that Council faces, said Alter, is that department heads may be reluctant to admit that a program is not a good use of money because they don’t want the funds to leave their department.

Flannigan similarly said that city staff may hesitate to voice concerns about a program due to a lack of “political support” from Council.

Indeed, noted Council Member Delia Garza, the city has had contracts with some nonprofit service providers for so long that those groups have come to expect and depend on that annual appropriation. It’s not easy for Council members to support an abrupt change in direction that could be the downfall of a longtime city partner.

Photo by M.Fitzsimmons [CC BY-SA 3.0 or GFDL], from Wikimedia Commons.

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